Volvo's Product Development Practices: Focus on Safety

Introduction Contd...

The Volvo Safety Centre, which the company inaugurated in 2000, had facilities for conducing crash tests which, analysts said, had not been replicated anywhere till late 2004.

Commenting on the value proposition offered by Volvo to its customers, Maryann Keller, an automobile industry analyst noted, "Since the introduction of airbags in the late 1980s, the industry has understood that safety sells. A customer who buys a Volvo may find that incremental value is worth the cost simply because (he or she) already places a higher than normal value on safety."⁵

The two founders worked earlier for SKF, a famous Swedish bearings manufacturer, where they nurtured the dream of building a car. In 1926, the duo prepared 10 prototypes of a car in a bid to convince SKF into investing in the company. The company not only agreed to invest Swedish Krona (SEK)⁶ 200,000 in the venture, but also lent its patented name, AB Volvo.

On April 14, 1927, the company rolled out its first car, the OU4, from a factory near Goteberg, Sweden. The day marked the official date of inception of AB Volvo (Volvo)⁷. In 1928, Volvo started producing trucks. In September 1929, Volvo reported its first ever profit. The positive truck sales made its operations financially viable.